The State Bank of Pakistan (SBP) will announce its monetary policy on Saturday, September 29, for next two months. Analysts are expecting the SBP will further tighten monetary policy by increasing key policy rate. "The SBP is most likely to increase the policy rate by 50-75 basis points, mainly due to rising inflationary pressure, widening current account deficit and depleting foreign exchange reserve, besides rise in international commodities' prices that would exert further pressure on the balance," they said.
Moreover, on the local front, the rise in gas, electricity and petroleum products' prices will also fuel up inflation going forward, they added. In view of the inflationary trends seen by the close of FY18, the estimate for average CPI inflation for FY19 has already been revised upward to 6-7 percent, from the previous range of 5.5-6.5 percent presented in the last monetary policy meeting held in May 2018, when the committee increased the policy rate by 100 bps to 7.50 percent.
Current account deficit has surged to $2.721, up 10 percent during first two months of this fiscal year compared to $2.47 billion in the same period of last fiscal year. The country's total foreign exchange reserves have reached below $16 billion at the end of last week.
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